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This FCC rule change could put funding for public access TV at risk

It's unclear exactly how much money is at stake, but the change will likely impact nonprofit operators' abilities to reach underserved audiences. Here's how PhillyCAM and the City of Philadelphia are responding.

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Full disclosure: Comcast, which is mentioned in this story, has previously sponsored Generocity initiatives such as Tech in the Commons and sister site Technical.ly's Philly Tech Week. That relationship is unrelated to this story.

Public access TV and radio station PhillyCAM is asking the public to respond to an FCC rule change proposed in September that could eliminate some funding for public, educational and government access (PEG) channels operated by nonprofits, municipalities, universities and school districts.

But those cable companies, such as Center City-based Comcast, are already charging subscribers for the PEG access expenses on their monthly bills, said PhillyCAM Executive Director Gretjen Clausing on Tuesday. Deducting more from what they pay to the city in fees, she said, is “sort of like they’re double dipping.”

“The way public access has operated since the late ’70s when cable began being deployed throughout the county,” Clausing said, “was the FCC saw an opportunity to right some of the wrongs of commercial broadcasting and serve the public interest” by shifting some funding from those companies to PEG channels. (Comcast channels 66 and 966 and Verizon FIOS’ channels 29 and 30 in Philadelphia are PhillyCAM-operated PEG channels.)

Cable companies enter into franchise agreements with a local franchising authority (LFA), such as the City of Philadelphia, to gain access to public rights of way, like the sidewalks and telephone poles needed to operate their businesses. In turn, those companies pay their LFAs 5 percent of their gross cable revenues — which Clausing said is “in the millions each year” — in franchise fees, which LFAs invest in technology or funding for PEG channels.

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The FCC’s proposed rule changes, however, would redefine “franchise fee” to include the fair-market value of “in-kind compensation” contained in a cable franchise, such as the creation of a network that connects government buildings and equipment used by the PEG operators, thus allowing those companies to deduct from what they pay to their LFAs.

(Some added context: In 2015, when Comcast’s 15-year franchise deal with the city was being negotiated, Comcast agreed to pay $21.3 million over 15 years to the city’s PEG channels. PhillyCAM receives just under half of that figure, bringing its funding from the deal to $733,000 per year. That figure is separate from the 5 percent in franchise fees that goes directly to the city.)

City of Philadelphia Spokesperson Mike Dunn said that right now, it’s “difficult, if not impossible, to precisely calculate or estimate how much franchise fee revenue the City may lose if the FCC’s proposed rule were to go into effect unchanged.

“Depending on how the FCC finalizes the rule, it could permit franchisees (cable providers) to deduct the ‘fair market value’ of any in-kind services (such as the provision of [PEG] access channels and below-cost internet service for government buildings) from the 5% of gross revenue franchise fee that the City collects each year,” he wrote in an email. “Because nothing in the proposed rule provides guidance as to how the fair market value of in-kind franchise provisions will be determined, it is difficult to ascertain precisely the fiscal impact on local franchising authorities such as the City of Philadelphia.”

While Dunn said it’s also impossible to predict how much revenue PhillyCAM, which also offers media production classes to its members at Seventh and Ranstead streets, stands to lose, “there is a very real possibility that PEG operators like PhillyCAM will see other negative consequences, such as the reduction or elimination of public access television channels.”

The FCC opened a public comment period, and in November, over 3,000 comments were filed, including from the City of Philadelphia. Now, the agency is asking for replies to those comments, and the city is asking fans of its PEG channels to write letters of support by the end of today to be included in its reply. Public replies are also open through Friday.

A Comcast spokesperson said the company did not file any comments to the FCC. A spokesperson for NCTA, a national internet and television trade association, shared this comment from the organization:

“Congress capped the amount local franchise authorities can charge cable companies for use of the public rights of way in order to protect consumers from excessive fees. Today, cable companies pay over $3 billion per year in franchise fees to local authorities. Those fees can be used for community access channels or any other legitimate public purpose. The FCC’s proposed rule thus does not cut funding for these channels. It simply says that whatever costs the local authorities decide to impose on cable operators as a condition of their franchise, they cannot evade federal limits simply because they demand in kind compensation rather than direct payments.”

Lobbying organization Alliance for Community Media President and CEO Mike Wassenaar said he is concerned is that the spread of a diversity of thought represented by PEG channels will be limited by the rule change.

His organization’s 3,000 members are “deeply concerned” because “in some communities, there aren’t resources to provide local media instruction or creation of this type of media” beyond their own work, including in geographically isolated communities or communities with many non-English speakers who rely on PEG channels for information in their own language.

The expected dollar revenue change, though, is “guesswork,” Wassenaar said — though in some places, coffers funding PEG channels could be completely drained, forcing local governments to choose between raising taxes, paying for services or paying for channels.

“The cable industry,” he said, “is making a claim they are being shaken down by communities that are acting in some sort of criminal fashion. And you have an agency that is devoted to deregulation.” (FCC Chairman Ajit Pai gained notoriety in 2017 for supporting the repeal of Obama-era regulations protecting net neutrality.)

It’s unclear when a final decision on the proposed rule change will be made.